McKinsey vs. Me on Multichannel Marketing (part II)

The previous post (part I) was dedicated to the lesson learned that analytics can be used tactically (e.g. for marketing process ROI improvements) or strategically (e.g. for competing on analytics a la Netflix vs. Blockbuster).

In this post, let us remind ourselves that multichannel marketing can also remain a tactic or become a strategy.

McKinsey published a great article/paper on Multichannel Marketing. And I wrote a book on Multichannel Marketing. Yet, the contents of the two works could hardly be any more different from each other.

How come?

Well, McKinsey is of course a strategy consultancy. I on the other hand am a techy at heart. So from where each of us stands, it is only natural that we took different angles on the subject.

Diane Gorine from Colletete Vacations, the countries oldest vacation tour operator in the United States, compares a situation like this to the story of the six blind men and the elephant.

6 blind men and elephant

In short, six blind men were asked to explore and then describe an elephant. So the six men surrounded the elephant and reached out to touch it. Depending on where each guy stood he would touch a different part of the elephant. And so one man would think an elephant is much like a pillar, another would think an elephant is like a rope, and so fourth.

That is what happened to McKinsey and me.

McKinsey looks at multichannel marketing from a strategy perspective. For instance:

  • Blockbuster saying to Netflix:  I see you and raise you by 5000+ stores! Not only will I match your idea of renting movies online and sending them by mail. But I will also enable my customers to return movies to my stores and rent new movies on the spot.
  • Charles Schwab differentiating from both the Merrill Lynch’es and the Ameritrades by pitching a more balanced approach to multiple channels. As in: “You can do everything yourself and online with me, but whenever you want you can still get personal advice too”
  • ING Direct saying: Forget multichannel! We are going to be monochannel, i.e. online only, and we will pass cost savings on to our customers in form of better interest rates. (Much to Kevin Hillstrom‘s point that multichannel isn’t always necessary nor the best approach.)

Points well taken, McKinsey!  When deciding a company’s multichannel (or monochannel) go-to-market strategy, it makes sense to start right here.

Where does my book’s contribution come in then? Strategy doesn’t pay the bills. You have to know how to translate multichannel strategy into execution.

Consider this: “In my book”, ING Direct is actually still a multichannel business:

  • They are running not one but multiple web sites (bank, investment brokerage, etc.)
  • They send direct mail offers
  • There is email too.
  • Of course you can call the call center when you have a question
  • They are running a few ING Cafes, e.g. in New York City
  • They advertise online, in broadcast media, and outdoors
  • Ever heard of a little thing called the ING New York City Marathon?
  • Etc. etc.

So if you imagine being a marketer at ING Direct, wouldn’t you want to:

1. Be Accountable 

In order for marketers to account for marketing dollars spent, they need to be able to measure marketing outcomes across all these channels (as much that is possible). Comparing baseline results vs. the effect of changes made to marketing vehicles is necessary for improving results over time.

2. Get Heard

In order to get your marketing message heard in today’s world full of “marketing pollution”, messages need to be helpful, i.e. relevant to audiences. So instead of interrupting a caller to the call center and asking them: “and just because you called today would you also care about some random offer XYZ…”, that offer XYZ can and should be as relevant as possible. Well, that means listening to not just customers’ multichannel transactions, but also their non-monetary interactions (e.g. emails opened, clicked, web pages browsed, recency, frequency, latency on the web site, etc.).

There is a considerable mountain of know-how to climb for successful multichannel marketing execution. And that is where I am hoping the book may come in handy to my fellow marketers in the online and offline worlds.

Bottom-line: Another name for this post could have been: Multichannel marketing tactics vs. strategy. But would you have read it if that had been the title?

9 Responses to “McKinsey vs. Me on Multichannel Marketing (part II)”

  1. Akin,
    Great points. To be a true multi-channel marketing, you not only have to listen to customer’s multi-channel transactions but also should have the process in place to respond to it as required. From this perspective, (IMHO) in a true multi-channel synthesis a company will have a publish and subscribe infrastructure where information about a customer is published constantly by various channels as and when it is acquired and simultaneously, channels are also subscribing to the key information pieces from other channels. This will then allow them to formulate the action plan in terms of the best contact strategy for any customer. Anyway, this is a long debate in itself but I thought I will throw in my few lines on this 🙂

    Ned

  2. Ned,

    I like how this “publish and subscribe” idea sounds, but is it meant literally, as in there are multiple copies of the “complete customer”? Or are you talking more about a process, where there is still a “single truth” customer database that silos subscribe to and update?

    I have read in some of the tech trades that the idea of a “central” database was being replaced by various kinds of middleware “fetch” ideas…not sure if anybody is actually doing this yet though…

    Signed,

    Knows enough about technology to be dangerous

  3. I will be curious to learn Ned’s opinion there too. As a techy, I have been fascinated by the notion of CDI, Customer Data Integration. I.e., a central application would own the customer system of record and all other applications would read and write from/to it.

    Along with this would go something that the BI guys call “master data management”, i.e. a central definition of what all the data items mean. For example: A central definition of what the customer attributes stand for.

    From a software guy’s perspective this seems such a clean and pure idea. It would be the tech infrastructure for a single customer picture across all applications in the enterprise.

    Alas, the idea is so abstract that it hasn’t made much progress as far as I can tell. It seems to come into fashion in conferences and then disappear again. Plus the big CRM players, SAP, Oracle, are holding on to that customer record as the key to their own future.

  4. Jim,
    Inherent in this model is a built in redundancy. However, I am not saying the entire customer database will be replicated at each touchpoint/channel. What will be replicated will be the relevant pieces of customer information as it pertains to a specific channel (no channel would need all the pieces of customer information collected). Also, if a business entity wants it, they can have a ‘single truth’ data warehouse housing every piece of information they collect and have a pub/sub network running through their Enterprise delivering relevant pieces to various subscribers.

    Pub/Sub is not a new concept as it has been a standard in the financial industry for integration and dissemination of information (using middleware companies like Tibco). I have seen it in use myself but mainly from an IT perspective to deliver messages on data acquisition etc. I really believe that this model can apply very well to Marketing. One of the reasons (in my opinion) why we have so little of multi-channel marketing is the difficulty in getting information from other channels. Currently most folks use the ‘request and respond’ structure — if you want info, you have to make a formal request to the other party. The other party then wades through and prioritizes the requests. And if and when you finally get the info you want, it has gone down in time-value.

    What I was envisioning (from a Customer Experieince perspective) was an infrastructure where the key stakeholders (whether it is Brand/Online/Customer Service/Sales/Direct Mktg) broadcasts the classes of information they collect on customers. Each touchpoint then subscribes to parts of this brodcasts. The cool part of this model is that no group is now overloaded with information requests (we do away with the request model). The other part I personally like is the fact that a person with vision can build a fantastic proactive process on top of this to deliver excellent customer experience — as they now know what/how the customer interacted with the other channels.

    Anyway, sorry for the long post :-). I am a rambler — especially on things I am passionate about.

    Ned

  5. Akin,
    I saw your post after I hit submit. Anyway, I agree with you that the first step is to have a central/standard defintion of a customer. That is where I started — you will be surprised that a ‘customer’ means different things to different groups (could be an account number, could be an individual etc.). From there you build a common definition of the customer profile, …and so on. (consideriny my previous post, I will keep this short) 🙂

  6. I can see the value of this kind of system very clearly in ops / service. But in Marketing I get concerned about contact strategy and the ability to test / control with confidence if communications is a free for all.

    For example, in retail and banking, every channel / product line inundates the best customers with their own promotions trying to steal sales from the other channels. Analysis is one thing, but you get MultiChannel Mayhem unless there are some safeguards on who can communciate when.

    Not to mention customer experience issues…

    Akin, Unica must have seen some of this problem with true multichannel clients? The “pecking order” issue?

    The only way I know of to do this properly (avoid communication fatigue, keep silos from stepping on each other’s controls, etc.) is to have a gatekeeper on access to a centralized customer database.

  7. Jim,
    I am sorry if my post was confusing…I did not intend to say that the contact strategy should flow from this pub./sub system. What I intentended to say was that the CONTENT for contact can be better synthesized if a channel has complete information about a customer’s interaction with their company (through any channel/touchpoint). The pub/sub system will allow this transparency and so for example an email campaign can be customized knowing that customers called the customer service about a particular issue/request or some new information from brand marketing.

    As to the pecking order, I agree with you that this has to be centralized. The way I envision it and have seen it executed is to have a central database of interaction history which will house interactions for any customers through all channels. There were no gatekeepers, but instead there were certain rules in terms of #of contacts a customer can have through a channel depending on their size, nature of contact etc. Also, once the content was finalized – you went through all the rigor in terms of control group, measurement etc. — and additionally, every touchpoint has the responsibility to report back to this repository in terms of their success/failure/issues so that future contacts can learn from this.

    Ned

  8. This has been a fascinating discussion to follow! Yes, the problem that Jim is describing is sometimes described as contact fatigue or contact optimization. It is a GIANT issue that many of Unica’s larger customers had to overcome.

    So I was fortunate to write about Wachovia as an example on page 98,

    It is kind of funny. Companies set rules against contact fatigue. For example, no more than one marketing message per time period per customer is allowed. As soon as the rule is set however, all marketers rush to get their message out as soon to the beginning of each new time period as possible. If you come 3 days too late, sorry, all customers have already been “used up” for the period. Wait until the next round!

    So Wachovia switched from product centric “whoever is first to get their message out” marketing, to customer-centric, i.e. “whichever message optimizes the forecasted value for customer and company”. They started doing that manually and then automated it with the help of software.

    But it is far from being just a software problem. In the case study, I found intriguing that the product managers were all “concerned” that they wouldn’t get to push their own product’s message out anymore once contact optimization is put into place.

    Akin

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